KJ Wade, Limited Partnership has answers to "Frequently Asked Questions"

KJ Wade, Limited Partnership is always prepared to handle any concerns you might have about appraisals or real estate in Grayson County. Feel free to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
Why would I request services from KJ Wade, Limited Partnership?
What is the difference between an appraisal and a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What are the contents of an appraisal report?
Once the assignment has been completed, how can I have a guarantee that the value indicated is veritable?
How difficult is it to become certified?
Who are an appraiser's customers?
Where does an appraiser get the data used to estimate values in Grayson County or other areas?
Why do I need a professional appraisal?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Should I do anything in advance of the appraisal appointment
How does an appraiser define "Market Value"?
Who actually owns the appraisal report?
Which home renovations add the most to the price?



Define the term "Appraisal"   (Go to list of  questions)

An appraiser provides an estimation that produces an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or valuation. The Cost Approach is one of the processes that real estate appraisers use to find value; it involves discerning what the improvements would cost minus physical deterioration, adding the land value. The Sales Comparison Approach involves searching for similar houses in the vicinity and discovering the value based on making a comparison of those homes to the house being appraised. Usually, the Sales Comparison Approach is the most definite indicator of market value of a home. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the capital produced by the property.

Describe what an appraiser does   (Go to list of  questions)

An appraiser produces an impartial and well substantiated assessment of market value, in the support of real property exchanges. Appraisers reveal the details of their professional conclusions in appraisal reports.


Why would I request services from KJ Wade, Limited Partnership?   (Go to list of  questions)

There are many reasons to order an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal include:
  • If you are applying for a loan.
  • To reduce your tax burden.
  • To demonstrate a homeowner's acquired equity and remove Primary Mortgage Insurance.
  • To fight inflated property taxes.
  • If you need to settle an estate.
  • To give you a leg-up when purchasing a home.
  • To find an honest property value when putting your home on the market.
  • To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Because a government agency such as the IRS requires it.
  • If you are ever involved in a lawsuit.
If you need more information regarding the appraisal process, please click here.


What is the difference between an appraisal and a home inspection?   (Go to list of  questions)

Appraisers do not do provide home inspections and are not home inspectors. A third-party home inspector will evaluate the structure of the house, from the roof to the bottom. Generally, a home inspection report will discuss the amenities and the necessities of the house: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

My agent performed a CMA for me. Is that the same as an appraisal?   (Go to list of  questions)

Honestly, they have nothing in common. The CMA depends on vague market trends. The appraisal relies on similar verifiable comparable sales. Location and architectural values are also important in an appraisal. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the biggest difference is who's creating the report. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an unbiased voice, with no conditional interest in the value conclusion, unlike the real estate agent, whose income is tied to the value of the home.

What are the contents of an appraisal report?   (Go to list of  questions)

Each appraisal should reflect a believable value opinion and will clearly state the following:
  • Who engaged the appraiser and other intended users.
  • The intended use of the report.
  • The purpose of the appraisal.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic factors, the property rights valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible considerations.
  • All known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and the like.
  • Division of interest, such as fractional interest, physical segment and partial holding.
  • What was involved in the process of completing the appraisal.
For a more comprehensive look at all that goes into an appraisal report click here: Sample Appraisal Report


Once the assignment has been completed, how can I have a guarantee that the value indicated is veritable?   (Go to list of  questions)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
  • The appraisal used analysis of the information.

  • Whether individually or collectively, there were no grave errors contained in the appraisal, nor any material details left out.

  • That appraisal services were not conducted in a careless or negligent fashion.

  • The final appraisal report was easy to explain, sound and not easily discredited.
There are intense classroom and experience requirements that must be met in order to become a licensed appraiser in Texas. Likewise, appraisers must obey a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Go to list of  questions) Regulations regarding licensing and certification vary from state to state. In general, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once licensed, he/she must then engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who are an appraiser's customers?   (Go to list of  questions)

Mortgage lenders are an appraiser's typical customer, needing their services to ensure a home involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does an appraiser get the data used to estimate values in Grayson County or other areas?   (Go to list of  questions)

One of the main tasks an appraiser must accomplish is to gather data. Data can be classified as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is received from a variety of places. To find out about recently sold homes to be used as "comps", an appraiser will typically use the local Multiple Listing Service. To double-check actual sales prices, we research tax records and other public documents that are usually online nowadays. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood product.

And most importantly, the appraiser gathers general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.


Why do I need a professional appraisal?   (Go to list of  questions)

An appraisal is a worthwhile anytime the value of your home is relevant to some financial decision. For those selling a home, you'll want to determine a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. If you're buying, it makes sure you don't overpay. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.


My mortgage statement has an item on it for PMI? Can I get rid of that?   (Go to list of  questions)

PMI is short for for Private Mortgage Insurance. This supplemental plan covers the lender in the event a borrower is unable to pay on the loan and the market price of the house is lower than the balance of the loan. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.

The amount you keep from cancelling your PMI will make up for the cost of the appraisal in no time. Nobody is more qualified than KJ Wade, Limited Partnership when it comes to analyzing real estate appreciation in Sherman and Grayson County. Contact us today.

Should I do anything in advance of the appraisal appointment   (Go to list of  questions)

We begin with an inspection of the home. During this process, the appraiser will come to your home and measure it, determine the layout of the rooms inside, confirm all aspects of the home's general condition, and take several photos of your house for inclusion in the report. The best thing you can do to help is make sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and move any items that would get in our way while we measure the structure. On the inside, make sure we can get to appliances like furnaces and water heaters.

To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
  • Any records on the purchase of the property for the last three years.
  • A list of any personal property that will be left behind and sold with the home, such as a oven, or a washer and dryer, if applicable.
  • Most recent real estate tax bill and or legal description of the property.
  • A list of any major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
  • A list of "proposed" improvements when the property is being appraised "as complete".

How does an appraiser define "Market Value"?   (Go to list of  questions)

In real estate appraising, Market Value is commonly defined as:

"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."



Who actually owns the appraisal report?   (Go to list of  questions)

For mortgage transactions, the lender orders the appraisal, either directly or through a third party. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is certainly entitled to a copy of the report - it's usually bundled with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

The exception to this rule is when a home owner hires an appraiser directly. In these situations, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.


Which home renovations add the most to the price?   (Go to list of  questions)

This really depends on where the home is. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

As a rule, the most value returned from renovating a home comes in the kitchen. One recent study revealed that putting $20,000 into a kitchen remodel would add about $17,500 to the value of the home - or about an 88% return on investment. Bathrooms weren't far behind, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.


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